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April 30, 2012

Parents, Pets and Online Presence: New Concerns for Modern Estate Planners

Traditional focus of estate plans has changed for boomer generation

Estate planning requires attention to more than just children’s inheritances these days, according to a report released Monday by the BMO Retirement Institute, an organization based in Canada. Aging parents, pets and digital assets are new concerns for modern estate planners. The Institute surveyed people in the United States and Canada for the report.

Traditionally, estate planning has focused on leaving money for children or charities, says Tina Di Vito, head of the BMO Retirement Institute, in a statement. "However, we need to start incorporating emerging trends, such as advancements in technology, our close relationship with pets and the ongoing care of parents if we want to minimize the burden on loved ones."

The report, “Estate planning in the 21st century: New considerations in a changing society,” found that 15% of Americans provide care for a parent, relative or friend. Of those, 58% provide both personal and financial care. However, only 33% of caregivers have made plans to continue care if they die unexpectedly.

The main reason caregivers don’t make provisions for continued care for a loved one after their untimely death is that they don’t believe their loved one will outlive them. Twelve percent simply hadn’t thought of it.

The report says 61% of Americans own a pet, and, of those, 89% consider their pets to be family member. Furthermore, 77% believe pets should be included in estate plans. Still, only a third have made plans to do so.

The report found spending on pets has been rising by about 4.5% per year since 2008, despite the economic downturn.

Without provisions for pets, some could end up in animal shelters, which may be unacceptable to some clients. To plan for future pet care, one option for individuals, the paper found, is to consider leaving a “reasonable” financial legacy to a trusted caregiver.

Boomers today have amassed a large amount of intangible digital assets, the paper found. Almost all have established an online presence through at least one personal online tool, and 85% have at least one financial tool. However, among those who have made formal estate plans, 57% haven’t made provisions for those assets.

Those intangible digital assets come in many forms, according to the paper, ranging from financial statements and online investment accounts to loyalty programs, email and personal blogs or websites, and, of course, social media accounts. For example, the paper notes the concept of an “heirloom” has changed as people use digital media more frequently. Family photos that may be very important to certain family members may not be passed down in photo albums or shoeboxes, but on hard drives and flash drives.

In some cases, transferring those assets may not be considered important by clients. Thirty-seven percent of respondents said they hadn’t made provisions for those assets in their estate plan because they didn’t think it was necessary. However, since 50% of respondents said they hadn’t included digital properties simply because they hadn’t thought of it, it may be worth raising the issue with clients. And, while not knowing the password to a deceased spouse’s Facebook account may be inconsequential, access to online bank and investment accounts is decidedly more important.